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Bedroom tax threatens to displace thousands of tenants

June 28, 2012 | Landlord News  

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It has been reported today that housing associations in the North-East of England have warned that the thousands of tenants who are to be displaced by the coming ‘bedroom tax’ cannot all be housed in small houses in the private sector. The ‘bedroom tax’, due to come into effect next April, is an under-occupation charge for people living in social housing who have a spare bedroom. People with one spare bedroom will have their housing benefit slashed by 14%, while those with two or more unoccupied bedrooms will face a 25% deduction.

But even those who use all their bedrooms can still be affected, because the rules say that children of different genders are expected to share a bedroom until the age of ten, and up to the age of sixteen if they are of the same gender. With the startling reports this week of seven million working adults being ‘just one bill away from disaster’, this ‘bedroom tax’ could have huge implications for the poorest. Many, including those who are disabled, who used a spare bedroom to store medical equipment, will have to leave their homes in search of more affordable, smaller houses in the private rental market.

Up to 50,000 households in the North-East of England could be affected, and the Department for Work and Pensions estimates that 670,000, approximately a third of tenants on housing benefit who are currently living in the social sector, will be hit by this ‘bedroom tax’. Iain Sim, chief executive of Coast & Country (one of the housing associations that has spoken out), said, “We are very concerned about this and the impact it will have on our tenants. We currently have around 2,500 under-occupying tenants who face losing up to £25 a week, but we only have 16 one-bedroom properties available for them to move in to.

 “This will potentially push more people into poverty.”

Monica Burns, the North-East manager for the National Housing Federation, described the new rules as “futile and unfair”. She went on to say, Housing associations in the North-East have always been encouraged by Government to build bigger homes so families could live in the same homes for life and didn’t have to move when they had children. And as land was cheaper here that made good sense. Now those same tenants and housing associations are being penalised for having the wrong type of house.”

Although there are nowhere near enough private rental properties of the appropriate size to take on the potential numbers of displaced social housing tenants, new analysis from data information firm Experian shows an increase of 6.34% in the number of properties on the rental market in the first quarter of this year.

The number of properties for sale dropped by 2.53% compared with the same period in 2010. In total, 172,290 properties appeared on the rental market in the first quarter, with more than 60,000 of them added in January alone. The overall number of homes added to the market for sale, however, has dropped by 4,846 from the first quarter of 2011 to 187,046. The only areas to see a rise in new properties for sale compared with 2011 were Wales (up 17.21%), Scotland (up 8.94%), and the North-West (up 4.03%). With a drop of 13.52%, the North-East fell furthest.

Many regions saw a substantial increase in the number of rental homes to let, dropping only in the East Midlands (by 3.57%) and Scotland (by 1.85%). In London, the number of properties to rent (which make up 20% of all rental properties in the UK) nearly doubled the number of properties for sale.

Closer to home is the news that Leeds landlord Mr. H has been ordered by court to pay £3,462 after he accepted false references from troublesome tenants. The property they occupied was the subject of many complaints from neighbours about anti-social behaviour, in an area covered by a selective licensing scheme. The property was visited by the West Yorkshire Police on 17 occasions since November 2008.

When Leeds City Council officers asked Mr. H to provide references for one of the tenants who had recently moved to the area, suspicions were aroused, as one of the referees denied writing the reference. Leeds Magistrates Court fined Mr. H of Gipton, East Leeds, after he admitted to six offences against the selective licensing rules. This is the second time he has been prosecuted by Leeds City Council for breaching his selective license conditions.

A spokeswoman for Leeds City Council said, “This serves as a warning to any landlords who do not obey the rules associated within the selective licensing area of the city. It is very important that landlords strive to obtain decent and truthful references from prospective tenants to stop such issues as anti-social behaviour.” Landlords are required to hold a license in order to rent out property in areas where selective licensing is applied. These licenses typically cost between £400 and £600 spread over 5 years.

Landlords must be able to show that they are acting within the law, managing their properties professionally, and keeping them in order. Graham Kinnear, managing director at Landlord Assist, said, “Local authorities are, in increasing numbers, introducing selective licensing areas as a result of the permissions given to them by the 2004 Housing Act to improve conditions of rented properties in selected areas. “We urge landlords in areas of selective licensing to take their responsibilities seriously, ensure they adhere to the conditions and don’t take any short cuts.”

Finally, the news that the Association of Residential Letting Agents (ARLA) has a new President. Jane Ingram of Savills has stepped in to fill the shoes of Tim Hyatt of Knight Frank, who took the helm 12 months ago, describing his tenure as President as “the first part of a three-year plan”. Jane Ingram joined Savills in 2005 as the National Head of the Lettings, and was Head of Lettings at Chesterton prior to that. She said, “I’ve worked in lettings for 21 years and I know that the industry is in need of a champion now more than ever. In the coming months, I will be meeting with ARLA members across the country.
 
“I will also be picking up where Tim left off, focusing on improving communication between Arbon House and our many members, helping to promote the importance of using a professional lettings agent.” Susan Fitzgibbon has become President-elect of ARLA.

 

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